A few weeks ago, the UK government announced their first fine based on a violation of the European Union Timber Regulations (EUTR). However it was not about actually selling illegal material. It was based on the failure to perform due diligence.
Here is what the UK government stated:
“The company failed to exercise the required due diligence when placing an artisan sideboard on the market, imported on 1 June 2016 from India.”
Compare this with the US Department of Justice’s News Release on the Lumber Liquidator’s plea agreement:
“Lumber Liquidators pleaded guilty and was charged in October 2015 in the Eastern District of Virginia with one felony count of importing goods through false statements and four misdemeanor violations of the Lacey Act, which makes it a crime to import timber that was taken in violation of the laws of a foreign country and to transport falsely-labeled timber across international borders into the United States. The charges describe Lumber Liquidators’ use of timber that was illegally logged in Far East Russia, as well as false statements on Lacey Act declarations which obfuscated the true species and source of the timber.”
In the US case, it was established that the timber was both illegally harvested and imported.
However this is not the situation in the UK case. Rather the issue was that they failed to have a program in place to assess and mitigate the risk. There was no specific charge that the product itself was illegal, and the company stated that “We would like to clarify that there was never any suggestion that any illegal timber was ever identified or that there was a significant or even modest risk of any having been introduced to the market.” This may or may not be true—but it’s also not the issue in this charge, which gets down to a big difference between Lacey and the EUTR.
Under Lacey, you are under no specific responsibility to have a due care program, but you have full responsibility for any illegal timber in your supply chain. (This goes for everyone in the ownership chain, although generally charges are likely to be pressed against the company that placed the wood into the market—and of course you absolutely SHOULD have some type of a due care program.)
Under the EUTR, the first company to place the product on the market (be it the importer or the domestic producer) is required to establish a risk assessment/mitigation program (and unlike Lacey, the liability stops there rather than continuing down the chain unless it’s a clear conspiracy of some sort). More importantly, failure to have that program in place can clearly result in a legal proceeding such as we’ve just seen in the UK.
I’ve heard some people complain about the level of the fine (the total would be somewhere around 7000 US dollars), stating it’s too small. But I think the precedent is pretty impressive. The company was not found guilty of selling illegal wood. The company failed to properly investigate their supply chain. That’s a pretty big difference and it is a LOT easier to check company’s Standard Operating Procedures (or lack thereof) than if a specific piece of wood is illegal. Exporters to Europe should take note. US importers and manufacturers should too—the US government surely is. And everyone should ask: